Commentary and Tracking of a Portfolio of Stocks using approach from "The Little Book that Beats the Market" by Joel Greenblatt aka Magic Formula Investing

Saturday, October 04, 2014

Weekend Update - October 4th

Weekend Update

Not feeling too hot today. I woke up Friday morning in New York with cold/flu symptoms and it has just gotten worse. Having some fresh Apple Cider to try to help this morning.

It probably doesn't help that last week was my fifth straight week of decline. It may not be a "correction" or "bear market" for the broader market, but it certainly is for me. I saw a very similar stretch in 2007, where my stocks went down in advance of the big crash in 2008. I do believe smaller cap stocks can be a leading indicator.

I was busy on the transaction front during the week. I did start off my new MFI strategy, dubbed "MFI Big". I also did buy VEC (which was a good move) and I bought and sold VSLR (which was a bad move.

For the month of September, I was down 10.4% (ouch). For the 3rd quarter, I was down 9.5%. For the year, I am up 4.3%.

Week By Week Graph

Certainly not for the faint of heart or those with "week" stomachs. Here is my week by week chart compared with Russell 3000 in 2014. Pretty steep sell off. It could have been much much worse. I did get some relief by deciding to sell a bunch of stocks and transition my strategy about 3 weeks ago. The stocks I sold are down 8.4% since my sale! RIOM is down 20% and TLM is down 16%. I don't need to tell my readers that anything associated with basic materials has been crushed.

MFI Big

So let us lead off with my five stinky stocks using my formula-driven approach. Recall that these were from the official MFI list and then picked using a random number generator. I do not think I would have actually picked all five of these stocks (I have some concerns).

10/1/2014 Stocks

Start

Current

Dividend

Pct Gain

R3K
Gain

BAH

$23.52

$24.76

$0.00

5.3%

-0.2%

BKE

$45.55

$46.26

$0.00

1.6%

-0.2%

CA

$27.87

$27.46

$0.00

-1.5%

-0.2%

GME

$41.70

$40.46

$0.00

-3.0%

-0.2%

NUS

$44.56

$44.99

$0.00

1.0%

-0.2%

Totals

0.7%

-0.2%

So you can see in the first week that they are doing ok. 51 weeks to go.

MFI

Now let us look at my traditional MFI and the four open tranches. First, let us see the month by month changes:

Date

Differential

Value

12/1/2012

-2.20%

99,765

1/1/2013

-1.78%

102,798

2/1/2013

-2.26%

102,594

3/1/2013

-2.23%

102,881

4/1/2013

-0.43%

106,804

5/1/2013

2.00%

110,423

6/1/2013

4.75%

115,831

7/1/2013

4.29%

114,888

8/1/2013

6.91%

124,799

9/1/2013

10.46%

124,536

10/1/2013

19.67%

138,655

11/1/2013

19.75%

143,514

12/1/2013

23.70%

150,105

1/1/2014

26.63%

157,138

2/1/2014

24.70%

150,619

3/1/2014

25.66%

158,116

4/1/2014

30.38%

162,991

5/1/2014

29.65%

162,428

6/1/2014

31.44%

167,001

7/1/2014

39.23%

177,971

8/1/2014

31.13%

167,054

9/1/2014

35.90%

177,792

10/1/2014

29.38%

168,321

Current

29.36%

168,021

You can see that on par with my overall portfolio struggling in September and the 3rd quarter, this portfolio was not excluded. Down about 5.5% for both time frames.

11/15/13 Stocks

Start

Current

Dividend

Pct Gain

R3K
Gain

AVG

$17.22

$16.75

$0.00

-2.7%

10.1%

ATVI

$17.71

$20.71

$0.20

18.1%

10.1%

GA

$9.04

$11.90

$0.23

34.2%

10.1%

RPXC

$17.04

$14.33

$0.00

-15.9%

10.1%

SYNA

$48.01

$76.87

$0.00

60.1%

10.1%

Totals

18.8%

10.1%

2/1/14 Stocks

Start

Current

Dividend

Pct Gain

R3K
Gain

ATVI

$17.13

$20.71

$0.20

22.1%

10.1%

KLAC

$61.47

$76.25

$1.40

26.3%

10.1%

RPXC

$16.22

$14.33

$0.00

-11.7%

10.1%

SNDK

$69.55

$95.63

$0.53

38.3%

10.1%

WNR

$39.11

$40.65

$0.78

5.9%

10.1%

Totals

16.2%

10.1%

5/6/2014

Start

Current

Dividend

Pct Gain

R3K
Gain

AVG

$19.57

$16.75

$0.00

-14.4%

4.8%

CA

$29.54

$27.46

$0.50

-5.4%

4.8%

CSCO

$22.79

$25.31

$0.38

12.7%

4.8%

NSR

$25.82

$24.86

$0.00

-3.7%

4.8%

RCII

$28.78

$30.55

$0.46

7.8%

4.8%

Totals

-0.6%

4.8%

8/15/2014

Start

Current

Dividend

Pct Gain

R3K
Gain

CSCO

$24.40

$25.31

$0.19

4.5%

0.3%

AGX

$36.71

$33.05

$0.00

-10.0%

0.3%

ITRN

$21.32

$21.18

$0.19

0.2%

0.3%

BRCD

$9.34

$10.61

$0.04

14.0%

0.3%

CBI

$58.25

$54.41

$0.07

-6.5%

0.3%

Totals

0.5%

0.3%

Category/Tranche

August

November

February

May

Total

Initial
Investment

25,000

25,000

25,000

25,000

100,000

Current Tranche

0.5%

18.8%

16.2%

-0.6%

8.7%

Previous
Tranche

41.4%

43.7%

78.3%

33.0%

49.4%

Tranche -2

14.1%

-

-

-

3.5%

MFI
Overall Gain

62.1%

70.7%

107.1%

32.2%

68.0%

Current Balance

40,514

42,676

51,775

33,056

168,021

R3K
Current Tranche

19.4%

10.1%

10.1%

4.8%

11.1%

R3K Overall Gain

46.3%

50.5%

33.4%

24.5%

38.7%

R3K
Balance

36,569

37,614

33,344

31,135

138,662

Annualized IRR

25.3%

32.8%

54.6%

21.8%

34.3%

The May and August tranches are struggling to get much traction. But this is symptomatic of MFI in total. It is a streaky system. My 10 rejects for August are down over 4% but my ten rejects for May are up 4.5%. The end of April and end of July MFI tracking portfolios of 50 stocks are each down about 3.5%.

Dividend Portfolio

I did add CCUR to this portfolio this week. It is a promising micro cap that yields about 6.4%.

Stock

Shares

Avg Cost

Current Price

Dividends Received

Pct Change

R3K Change

Diff

AOD

14,281

8.04

8.42

12,519.36

15.7%

20.3%

-4.6%

CCUR

7,000

7.25

7.49

-

3.3%

1.2%

2.2%

CSQ

7,050

8.74

11.66

14,847.48

57.5%

53.7%

3.9%

EXETF

6,000

7.82

7.31

240.00

-6.0%

-2.8%

-3.2%

NADL

9,572

9.11

6.06

2,727.85

-30.4%

0.6%

-31.0%

NTC

6,847

12.02

12.43

3,060.02

7.1%

5.1%

2.0%

O

603

21.12

41.10

9,680.62

170.7%

112.9%

57.7%

OIBAX

4,167

5.01

6.00

8,381.18

60.0%

123.2%

-63.3%

TCMCF

4,903

13.89

12.46

-

-10.3%

-1.7%

-8.6%

TGONF

7,000

10.27

10.96

3,452.50

11.5%

18.7%

-7.2%

TIME

2,000

22.89

22.74

-

-0.7%

-0.3%

-0.3%

TNH

700

146.54

140.70

1,555.00

-2.5%

0.7%

-3.1%

Total Open

56,464

8.4%

14.8%

-6.4%

Closed

11.9%

10.5%

1.4%

Combined

11.5%

11.1%

0.3%

Annualized IRR
Since 12/31/10

15.4%

2014 Gain

-0.7%

Now down for the year. NADL has been in free fall. TIME has also been down a lot of late. TCMCF, which seemed like such a steal, is also down.